Congratulations – you’ve got a job in a hedge fund! You’re an ‘execution trader.’ Isn’t that exciting? Or not.

According to various covert and not-so-covert sources, execution trading jobs in hedge funds are very far from being the most stimulating jobs in financial services.

“In some places, execution traders are really advanced admin professionals,” said Chris Apostolou at Arbitrage Search and Selection. “There’s no real decision making involved – all you’re doing is plugging numbers into a machine. An algorithm tells you to buy 50m ten year treasuries and you do it. You’re basically an overpaid and overqualified administrator.”

Execution traders simply ‘execute’ trades. At worst, they have no say in the decision-making process and no opportunity to take a view on the market – they simply buy and sell upon command.

“Junior traders are often happy in execution-only roles,” said Barry Seath at Mirage Recruitment. “But as people become more senior they often want to do something else – the danger is that you will get stuck doing execution.”

Fortunately, there is an upside. Although they may be boring, execution-only roles can be very well paid. Apostolou said salaries for senior execution professionals can be anything up to £90k ($148k). This is matched by a similar bonus. “It’s not bad pay for an admin role,” Apostolou added.

The other good news is that not all execution roles are mind-numbingly mundane. Some offer opportunities for expertise and opinions. “There’s a massive variation between funds in what execution traders do,” said Apostolou. “At quant funds they will often simply enter the numbers dictated by an algorithm, but at funds trading illiquid products the role of an execution trader is far more complex and is much more about market timing and hunting around to find buyers and sellers.”

One execution trader told us he’s perfectly happy in his job. “If you’re not taking any risk positions and are just an order-monkey it can be pretty boring, but the execution guys here either have access to clients or are generating ideas for the desk,” he said.

How can you identify and eliminate the most tedious execution trading jobs at interview stage? The execution trader we spoke to advised asking how much autonomy you’ll have in the role, how much scope you’ll have to take a view, and how much interest the portfolio managers and analysts will have in your opinions on the market. “You can develop expertise around market timing and the nuances of certain algorithms,” he added. “You need to have an edge.”

Apostolou said people often move into execution trading jobs as a route into more interesting portfolio management roles. “If you’re in the middle office, execution trading has become one of the only ways you can progress. But execution traders who say they want to become portfolio managers will often be rejected,” he warned. “Hedge funds want to hire people who will remain execution traders for a few years.”

Comments (1)

It only gets worse for some as the role of execution is replaced by more efficient and capable auto execution algorithms. Thankfully, the job of order execution will then evolve into a ‘monitoring’ role – essentially becoming overpaid monkeys in charge of ‘overseeing’ robotic order monkeys (basically turning a switch off and on). ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZzzzzzzzzzzzzzzz!